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Home » Estate Planning » Living, revocable, and irrevocable. Let’s talk trusts.

Living, revocable, and irrevocable. Let’s talk trusts.

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Today on the Tulsa Estate Planning Blog, we’re going to explain the difference between a living trust, a revocable trust, and an irrevocable trust. Specifically, what are the advantages and disadvantages  of the types of trusts. So let’s get started.

A living trust and a revocable trust are usually, if not always, the same thing.  Both are trusts that are set up to hold assets during the life of the settlor or grantor (the person who created the trust) for the benefit of that person. It is called a “living” trust because it is established during the lifetime of the settlor. It is also called “revocable” because the settlor can revoke the trust at any time during his/her lifetime. The purpose of the revocable, living trust is to avoid probate of the settlor’s assets after he or she passes away. The estate will avoid probate if the trust is written well and the settlor does not do anything irresponsible after the trust is created (like forgetting to transfer deeds into the trust name). After the settlor passes away, however, the trust will become irrevocable in that it cannot change. The “successor trustee,” or the person who was named to take over the trust’s management, shall distribute the property as described in the trust. Sometimes a trustee is a bank or individual who is paid for their services, but often it can be family and friends who will do it without a fee. This is one reason why trusts are less expensive than probate. The major advantage is that a revocable trust will avoid probate, and it is flexible in that the trust can be amended and changed.

An irrevocable trust is a trust that cannot be amended, changed, or revoked once it is established. Irrevocable trusts are normally formed by a person or family who wants to give away assets to another person, subject to certain terms that they do not want to be changed. Once the settlor puts the assets into the trust corpus, the settlor no longer owns or has access to those assets. There are many practical advantages to an irrevocable trust. There are tax advantages as well as creditor advantages. Creditors cannot gain access to the funds in the irrevocable trust since it is no longer in the settlor’s estate. However, the disadvantages may outweigh the advantages for many people. The trust cannot be amended or changed without going to court, and the settlor cannot get the gift back, ever.

Skillern Law Firm, PLLC can create both types of trust for your estate planning needs. Please contact us today! If you are interested in creating a will instead of a trust, please read our last post – The Difference Between a Will and a Trust.

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5 Comments

  1. […] what happens to the trust after they are gone (for more information about types of trusts, see Let’s Talk Trusts). One of the most common misconceptions is what happens to a Revocable Living Trust after the […]

  2. […] Our attorney encourages her client’s to use a Revocable Living Trust for estate planning purposes, probate avoidance and/or tax benefits. The problems of adding adult children on title to the timeshare are avoided with a trust. To read more about the benefits of a Trust, please read our previous post Living, Revocable, and Irrevocable. Let’s talk trusts. […]

  3. […] you do not have a Revocable Living Trust, your estate will have to be probated. Probate is the legal process required for estate […]

  4. […] To see what a Revocable Living Trust can do for you, read our previous blog post about the types of trusts and their advantages. A trust, if funded correctly, will allow its creator(s) to avoid the probate process. An unfunded […]

  5. […] part or all of your estate to your new child(ren).  You do not have to have anything fancy like a revocable trust, however, it does need to be done. Here are four simple steps to […]

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